Return to Transcripts main page


President Obama Pushes Jobs Plan Across Battleground States; Governor Jindal Likely to Win Second Term; The Economy Election; Angry at the Economy; Desert Storm; Reinventing America; Making Money with Money

Aired October 22, 2011 - 13:00   ET


CHRISTINE ROMANS, HOST: President Obama on the road this week pushing his jobs plan, but is he fighting for your job or campaigning for his own?

Welcome to YOUR MONEY. I'm Christine Romans, Ali Velshi is off this week.

Joining me today, Ken Rogoff, professor at Harvard University, Chrystia Freeland, editor at Thomson Reuters Digital, and economist, Stephen Moore.

Welcome, everybody.

I want to start with the president traveling through key battle ground states this week on an official trip, wants to push Congress to pass every part of his jobs act piece by piece. Steven, what is this about? Whose job is he looking for?

STEPHEN MOORE, ECONOMIST: Well, you won't be surprised. Look, my view is that if he had really been serious about wanting to pass a jobs bill earlier this year, I think he could have -- if he had moved to the middle, he might have been able to get something through Congress.

Once he started talking about a big tax increase on the rich, there was no way Republicans were going to go for that. So I do think this has become a political debate, not a debate about what we can pass right now. That's a problem when you have 14 million unemployed people.

CHRYSTIA FREELAND, EDITOR, THOMSON REUTERS DIGITAL: But, Stephen, didn't this summer teach the White House that there was going, you know, to be no consensus and trying to do a deal, trying actually to move in the center, which is what the White House tried to do over the debt ceiling isn't going to work.

You talk to the people at the White House -- precisely for that reason you talk to people at the White House and what they say is actually we really tried hard to do a deal and we now think it's a huge mistake because the other side doesn't want to bargain and that's what the president is hearing.

MOORE: Did make a deal.

FREELAND: Not a meaningful deal that moves economic deal.

MOORE: Economic war far, tax the rich, that's not a bipartisan consensus.

FREELAND: Right, exactly, he's changed. But to say that the reason he hasn't been able to pass his policies is because he hasn't sought consensus is just not accurately reflecting what he has done.

MOORE: There's nothing in that package that Republicans really like.

FREELAND: Not now, but that's because he tried to reach consensus and there was nobody on the other side of the table.

ROMANS: That's something his supporters want to hear, he's the one moving and they are not moving with him. I want to talk about the component of that bill.

The Senate actually blocked a component of the president jobs bill aimed at creating and saving jobs specifically for teachers and first responders.

The president made it very clear that if Republicans in Congress don't pass his job proposals, they will have to answer to the public.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: It's these proposals. If they say no to steps we know will put people back to work right now, they aren't going to have to answer to me. They are going to have to answer to you.


ROMANS: So this one is for Chrystia, even if the president gets parts of his jobs bill through Congress going forward he's facing record high levels of pessimism.

According to a CNN/ORC poll, 59 percent of Americans think the president's policies will fail. Is he better off running on his policies or that gridlock in Washington?

FREELAND: Well, I think he has to run on his policies, but I think that it is really, really tough. I think for him to run on gridlock, which is a little bit what we're seeing and also trying to blame the previous administration for the economic problems, I think that's going to be really difficult because people are going to say you've been president now almost for a full term.

MOORE: He ran as a uniter, not a divider.

FREELAND: Right and what he's saying now I think effectively is uniting hasn't work. I haven't been able to do anything. But at a time when the economy is in such really, really dire straits, I think that's going to be a really, really tough sell. ROMANS: Let's bring in Ken because the fed out, the beige book. We love the beige book. It said that our economy is not in recession, but it is losing steam. It's not doing anywhere near what we would like.

Are there pieces of the president's job plan that could help the situation or does it not even matter because the politics have made it impossible?

KEN ROGOFF, PROFESSOR, HARVARD UNIVERSITY: Well, I don't think anything in it is a game changer, but clearly something like extending the payroll tax cut might make sense.

I do think Stephen wrote a good piece about how we really need to think about something different here, new tax policy, new way of approaching things.

We are in for a long period of slow growth. It's not just about what's going to happen this year, but what is our future, where is America going. That's what we really need to see at this point.

ROMANS: The very near term, do you think we've averted double dip recession because there have been little bright spots, so little not terrible spots that's how I put it.

Jobs number that wasn't as bad as they thought. It was a Philly fed index this week that, you know, showed more activity than people thought. I mean, have we averted a second recession or is it just too miniscule.

ROGOFF: Well, I think, as you know, Christine, I don't think we ever left the recession in any meaningful sense. We call it the second great contraction, but is it going to get much worse?

I think the norm is that we have slow growth for an extended period. There's more healing and deleveraging. I'm very worried about Europe. That's hanging over our head.

We're not very strong. Our banks aren't very strong. That's the big risk. Otherwise if we solve that, slow growth until we have a game changer, until we have --

FREELAND: You are the guru of financial crises and how historically economies have recovered from them or not. Is this kind of economic winter just inevitable and should everyone have said at the beginning of 2009, OK, we've screwed things up. History shows it's going to be seven years before things get better?

ROGOFF: I mean, I'm afraid the answer mostly is yes. I mean, there are things you can do --

ROMANS: And you've said that repeatedly.

ROGOFF: Yes, yes. I mean, you certainly want to take aspirin when you have a fever.

ROMANS: You don't want to do anything that makes it worse.

ROGOFF: You don't want to do anything worse. You want to understand this is going to last for a long time. You don't want to panic. You want to look forward.

You want to ask how do we get back on our feet, how do we have a good decade and not just worry -- there was an idea we could jump-start everything, big stimulus, government, private sector will take over organically. It will all go away.

MOORE: I disagree. You and I have had this discussion. I think if we had done structural things that needed to take place with respect to changing the economy back in 2009. We'd be in much better shape now. The reason I'm kind of against this stimulus, too --

ROMANS: The president's jobs bill.

MOORE: It's putting a band-aid on a cancer patient. I mean, I think Ken and I are in total agreement. The problems are much more structural than just these temporary infusions of government spending.

ROMANS: But putting the band-aid on the cancer patient because you have a lot of people who are really suffering. Maybe if you can give -- the argument from the White House would be you've got to do something to alleviate suffering while we wait for the cure somewhere else.

FREELAND: Yes, and I think there is a really important question about actual human beings and human lives. You know, the thing I'm worried about the most in terms of this sort of the winter theory of what's going on is what happens to the generation that comes of age during winter.

The research about young people who enters such dreadful jobs market never gets a good first job. That's scary. I don't think you want a whole generation whose, you know, future prospects for 10, 20, 30 years can really be stunted.

ROGOFF: Ought to be things like, first of all, the housing. What do we do about housing? If you're going to run a deficit, do something dealing with that, thorny.

Education, what to do with 25 percent unemployment among teens. It's high among 20 to 25 years olds try to have something to bridge that, perhaps. But the vision ought to be long-term not that we're somehow solving the short-term problem.

ROMANS: And then let's talk about tax reform. That's not thorny and that's not long-term. We're going to talk about that in just a moment because tax reform is a very big issue right now this week.

It was all about Herman Cain's 9-9-9 plan. But now Rick Perry is talking about a flat tax. Would it be good for you? Is this the time for major tax reform? Is that something that could jump-start the economy? We'll take a look at that next on YOUR MONEY.


ROMANS: Republican presidential candidate Governor Rick Perry announcing this week he wants to overhaul our tax code with a flat tax.

In his preview of his economic plan, Stephen, flat tax proposals are not new. They have failed to move voters in past elections. Will this time will it work?

MOORE: Yes, many, many years ago, I worked with Steve Forbes remember in 1996. He was a little bit ahead of his time.

ROMANS: Yes, I think he's advising Rick Perry actually.

MOORE: He is. Look, I do think the time might be right. You know, you need one of those situations where the stars are finally in line to get this done.

Because the flat tax basically puts all the lobbyists, all the tax accountants and all the special interests in Washington basically out of business. It gets rid of all the deductions, postcard tax return, which is very popular with people and the gets rates down really low.

So maybe given the kind of crisis we're on right now, the time might be right for I guess, for Perry talking about next week coming out with some version.

ROMANS: What do you think, flat tax, does it help the economy?

ROGOFF: I love the flat tax idea. I mean, Steve Forbes version was good. There was an earlier one that Jerry Brown had. It's a spectacular idea, can you imagine tax form half a page, no bothering with accounting and lawyers and all the different things.

I think it would be a great idea. It's a big change. Some countries have done it. I think it's worked really well. We need a game changer. We need something that gives us growth. Some of it you can't control.

Somebody is going to discover something, the next Steve Jobs. We hope that will come. What can Washington do in this is something Washington can do if they do it the right way.

MOORE: If we had 18 percent rate or whatever it is, I mean, I think on a competitive basis around the world, it would make America a very competitive place. You'd see a lot less outsourcing.

ROMANS: Sounds like you guys are sold. Why didn't the United States do this?

FREELAND: Returning to the conversation Stephen and I were having at the beginning, I think that tax reform and tax simplification, even if it's not, you know, as perfectly simple as a flat tax, I think that's an area where you could have some real bipartisan support.

Because one of the things you're seeing on the left right now, the grassroots left is a sense that big business and vested interest has been successful in gaining the system that Stephen was talking about. The tax code has been a way that's happened.

MOORE: We finally find something we can agree on.

FREELAND: I think that that kind of simplification --

ROGOFF: They can lobby --

MOORE: One of the reasons you've got the Warren Buffett problem is because, you know, who takes advantage of all these loopholes, rich people.

FREELAND: It's why you have the Warren Buffett problem.

ROMANS: Maybe it's why Herman Cain has been doing so well in the polls, there's nothing more simple than three little numbers, 9-9-9.

Now we know that this week he modified 9-9-9 for people below the poverty line to 9-0-9, taking away taxes if they were below the income level. Is this why it's resonating you think because it's so simple?

FREELAND: Yes, I think that simplicity is very appealing right now. And I think what's also appealing is something that Mr. Rogoff has been saying, which is people know that this is winter. People get that.

You know, the historical research shows it, but people see that in their lives. So people I think really want something new. They want a new idea. They do feel there needs to be some game changing political transformation.

So I think, yes, I think this is appealing. I think with Herman Cain the difficulty is going to be as time goes on and people test, you know, is there anything behind 9-9-9 because the world is a complicated place.

ROGOFF: It's great -- I want to say 911, because that's what I want to deal with this economy.

FREELAND: Your plan.

ROMANS: Rogoff's 911 plan.

ROGOFF: It's a muddled version of the flat tax. The flat tax is beautiful. This is not. It has a lot of problems. I give him a lot of credit for having the vision. Let's make it simpler, do something people will understand. But I don't think it's quite the right way to do it.

ROMANS: -- who said, essentially wouldn't it be nice to give an expiration date to Congress for American tax code will expire on March 31st. OK, let's fix -- find something to put in its place.

Is now the moment to do that? I mean, we've talked about real tax reforms so many times, said the stars are aligned, but is now the time to do it?

MOORE: Now would be the best possible time.

ROMANS: Which means they won't, which mean they will not.

ROGOFF: You don't know. I mean, I'd much rather we channeled all this anger, you know, with the Tea Party, with the "Occupy Wall Street, channel all this anger to something constructive. I'm worried if we don't we're going to get a game changer, a trade blocking regulation.

MOORE: We did this in 1986. That's the amazing thing. We had a total bipartisan consensus for cleaning out the tax system and lowering rates. That bill passed 97-3.

ROGOFF: It's not as radical as this.

FREELAND: It all depends on the White House I think. You know, the president has said it's OK with me to be a one-term president if I can get big things done.

So this is a moment when he could really roll the dice on this. Another game changer I think is essential, which he tried to do is health care. If health care isn't fix and I don't think this reform fixes it.

ROMANS: He got things done his critics don't like. He got health care done. He got a big stimulus done. They said you've had your chance, Mr. President and we still have 9.1 percent unemployment so that's it.

MOORE: Repeal Obama care.

ROMANS: Here we go again. A whole other five-minute block. Thanks so much, Stephen Moore, Chrystia Freeland and Ken Rogoff. Nice to see you guys, have a great weekend.

All right, next, "Occupy Wall Street." Two guests, two different opinions. Both have witnessed the protest firsthand. One sides with the protesters, one doesn't. We're going to have both of those sides next.


ROMANS: "Occupy Wall Street," lots of anger from the protesters, lots of questions from those observing the movement from outside. We're joined by two men who observed these protests firsthand.

Will Cain is a CNN contributor. Matt Taibbi is a contributing editor with "Rolling Stone." Matt, you say you love these protests, but you want to see the movement focus on a few things. What are they?

MATT TAIBBI, CONTRIBUTING EDITOR, ROLLING STONE: Well, first of all, I don't think it needs to focus just yet. I think what it's doing right now is just getting bigger is an end in itself. They have been tremendously successful at that. Because everybody around the country is asking what do these people want so we can give them something and make them away. I think the longer they wait to announce specific demands, the more people will be willing to give them.

So right now growing is an important goal. But when it comes down to time to actually come down to specifics, I think they should settle on one or two really simple things.

Like, you know, for me the big suggestion would be break up the banks because that's something that already had a lot of support in Washington, a massive show of force could actually achieve that.

ROMANS: So break them up, make them smaller, make more of them?

TAIBBI: Just make it so that there are no more too big to fail companies. If a company is too big to fail, it's too big to exist. We cannot have this unhealthy situation where banks like Goldman Sachs and Citigroup and Bank of America have implicit support of United States government. It's not fair to the rest of the world. It's not fair to smaller regional banks. It's an unhealthy situation and taxpayers should not be on the hook for those businesses.

ROMANS: Will, you were down in Zuccotti Park. What did you see driving this? What did you see there?

WILL CAIN, CNN CONTRIBUTOR: Well, one thing I'm going to challenge Matt on is that I don't think people are just asking the "Occupy Wall Street" protesters what they want so they will go away, but so we begin to have a productive conversation, a focused conversation about how make things better.

Matt has written on "Rolling Stone" and I've read Matt's five potential demands, and one is a suggestion to Wall Street. One of them is what he just said, break up the banks. I would almost describe to every one of his pieces of advice to "Occupy Wall Street, including break up the banks.

And I would defend each of Matt's suggestions from a free market perspective. The problem is my conclusion is different that Matt. I do not like what I see at "Occupy Wall Street" because I don't think it's about what Matt wants them to demand.

I think if you give them all five of Matt's demands, nobody is packing up a sign and nobody is going home.

ROMANS: Well, that's one of the things because there are a lot of people who say I love the idea of "Occupy Wall Street," the movement.

But the movement says don't take your sort of liberal world view and try to put it on us because we're not a package for how you think the system should be changed.

TAIBBI: Well, but I think they are right to not define themselves yet because what's happening is all these people are trying to speak for the movement and trying to coral them and put them in a little box. And find leaders they can negotiate with or identify as head of this movement by not having a specific set of demands or structure, it's got everybody guessing.

ROMANS: What do they want, I guess? It's anxiety against the economy. Everyone has got that. Is it middle class uprising or is this a lot of people who felt like they haven't had a voice and bringing it together, but what are they asking for?

TAIBBI: I think it's an uprising of everybody except for a very small group of people who - yes, exactly. And I think almost everybody there is responding to the same thing, a sense of growing inequity not only in income, but especially in political power in this country.

This idea there are 400,000 people here deported millions of people foreclosed on with the help of law enforcement and not a single person has gone to jail for anything related to the financial crisis.

ROMANS: We've heard some prominent Democrats including President Obama emphasizing with the "Occupy Wall Street" movement. Listen.


PRESIDENT OBAMA: I think people are frustrated. The protesters are giving voice to a more broad-based frustration about how our financial system works.


ROMANS: So Democrats, do they deserve to have the protesters behind them with the ballot box? I mean, do you think this will become a political movement for the president?

TAIBBI: Absolutely not. If you look at the history how we get into this mess with the financial crisis, the Democrats if anything have been worse than Republicans.


TAIBBI: They have their hands on the repeal of the Glass-Steagall Act, the Commodity Futures Modernization Act, which deregulated the entire derivatives market.

ROMANS: And lowering standards for home ownership.

TAIBBI: Well, yes.

ROMANS: That's actually a very contentious part.

TAIBBI: To me that's a peripheral.

ROMANS: To the Wall Street part.

TAIBBI: Right, I mean, look, their chief architects of the bailouts since 2008. They have their hands on everything. Obama surrounded himself almost entirely with Wall Street people and they have been architects of his economic policy. There's no way people should have any faith in the Democrats.

ROMANS: You mentioned something before we went to that sound bite, and that was that you don't like what you see down there. Why? What do you think you see down there?

CAIN: Because I think what I see down there, I'm looking for commonality. It's very difficult to find it, as I spoke to people, they all want something different. But the one commonality I find is I find most of the things they want revolve around the human emotions of entitlement.

It's what you have is more than what I have and I'm not happy with my situation. So therefore, I should be entitled to whatever it may be, free education, burdened free from debt, a home not burdened by debt.

Again, it's really hard to define, Christine. But I do disagree with one thing Matt said, when you try to put a fence around everything they want, it does represent the spirit of the American left.

Will that means it's Democratic? It's definitely disenchanted with Democratic Party. But I think what they would like to see the Democratic Party change.

ROMANS: I want to show you a poll here quick. You know, most American support higher taxes for millionaires, but it's not personal. A CNN/ORC poll found seven out of 10 Americans either have a favorable view of millionaires or they outright admire them.

Just 5 percent say they resent millionaires and many Republicans say a push for higher taxes for the wealthy amounts to class warfare.

The polls say Americans want higher taxes, but don't resent the rich. So I guess I'm confused about -- is it unfair of Republicans to accuse of class warfare? Is it really envy if the polls show that people like -- in fact, it's the American dream to be rich.

CAIN: I think this is one of the first elections where in a conversation right now is more openly about class divide and class war we've ever had. I'm not going to defend the tax rate for the rich or suggest that it should pre-Bush tax cut levels or Bush tax cut levels, 36 percent versus 39, that's nonsense talk.

It's a stupid debate. The question is whether or not the tax code is efficient and fair. It's not. That's not Democratic position or Republican position. But the way to fix it isn't to sit here and pretend that the rich have a unhealthy burden. They don't have enough of a burden.

TAIBBI: I have to address this. You say it's about envy? Of course, it's about envy. I think a lot of people are jealous that Wall Street banks get to borrow billions of dollars at zero percent from the fed and then lend it out to us at 5 percent, 10 percent, 15 percent, 20 percent.

I think a lot of people would like to pay money to law enforcement instead of go to jail, which is what all these guys have been doing. A lot of people would like to have bailouts for all their bad investment decisions.

CAIN: We're not disagreeing. This is the point. That's right and they should envious of those things, but that's about corruption, Matt. What I hear, "Occupy Wall Street" isn't limited to corruption. If you and I could agree that --

TAIBBI: They are mad these people stole their money. That's what they are mad about.

CAIN: If you gave them your five demands that wouldn't alleviate one concern they have.

TAIBBI: Let's start with that and see how happy they are.

CAIN: I'm happy to do that. Too big to fail is too big to exist, we'll start there and I think you're still going to have a lot of unhappy people down there because they don't have what another guy has.

ROMANS: All right, guys, we're going to leave it there. Matt Taibbi, Will Cain, really great discussion. Thanks, guys.

Up next, the CNN Western debate. You've seen the highlights, but not like this. Pete Dominick and Will come back. They're going to break it down for us next.


ROMANS: Welcome back to YOUR MONEY.

A busy week in politics, the gloves certainly came off during CNN's Western Republican Presidential Debate that was Tuesday.

Here to help us look at some of the most memorable moments, two of our favorite CNN contributors, Will Cain is back along with Pete Dominick, host of Sirius XM "Stand Up."

All right, guys. Herman Cain, the candidate who slips back into the Herman Cain the pizza executive mode when on campaign trail, so when he decided to favor fruit instead of talking toppings at Tuesday's debate, well, no one saw it coming.


MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Are you saying that the state sales tax will also go away?

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: No, that's an apple. OK, we're replacing a bunch of oranges.

ROMNEY: Will the people in Nevada not have to pay Nevada sales tax and in addition pay 9 percent tax?

CAIN: You're mixing apples and oranges. You're going to pay the state sales tax no matter what, whether you throw out the existing code and put in our plan, you're still going to pay that. That's apples and oranges.

ROMNEY: I'm going to get a bushel basket with apples and oranges in it because I have to pay both taxes.


ROMANS: A large pizza to go with it. Pete, did that make you hungry?


CAIN: Why are you yelling?

DOMINICK: I'm angry. This isn't fake anger. Americans love 9-9-9 and apples and oranges because they can understand that. That's not a lot to understand. I'm too busy. Yes, it's apples and oranges. It's not. It's very complex. Our problems are complex. You can't use metaphors like apples and oranges to explain that.

ROMANS: But now it's 9-0-9 too. Don't forget there's 9-9-9 and now 9-0-9.

DOMINICK: -- which shows that Herman Cain has no idea what he's talking about. He's got like two people advising him and he has no idea what he's talking about. He really doesn't.

CAIN: I won't defend him on this. There are many substantive problems with Herman Cain and I have voiced them. He gives you vague answers on foreign policy. His 9-9-9 has many problems from a conservative perspective.

But his apples and oranges I can defend. His point is the state sales taxes that are in place are going to be there under Mitt Romney, Rick Perry or Barack Obama, the current president.

They're going to be there regardless. Those are the apples. He's replacing the current income tax with another income tax, the 9-9-9 plan. Those are the oranges. They are trying to mix state level taxes and the federal level taxes.

DOMINICK: Which they should. These people should know they have to pay both.

ROMANS: Ron Paul has some ideas about reducing our nation's debt.


RON PAUL (R), PRESIDENTIAL CANDIDATE: This debt bubble is the thing you better really worry about, because it's imploding on us right now. It's worldwide. We are no more removed from this than the man on the moon is going to get much worse.

And to cut military spending is a wise thing to do. We would be safer if we weren't in so many places. We have an empire. We can't afford it. The empires always bring great nations down.

(END VIDEO CLIP) ROMANS: All right, Pete, can the empire strike back with a lower defense budget?

DOMINICK: Yes, because our threat is not -- our military defense budget is only preparing us apparently for some type of alien attack, Christine. You could put all the rest of the country's budgets together and we still have more money for them.

What's the threat we're preparing for? We should be spending money on health care and Social Security, those issues. If you believe you're going to die in a terrorist attack and you live in Ohio versus heart disease, well, you've been duped.

CAIN: You know, I actually agree with something Newt Gingrich said, I'm a hawk but a cheap hawk. He and I agree a lot on these defense measures. I don't know why we're in Afghanistan. I can't put a purpose or goal on that mission.

There are places you can cut the defense budget, but you have to be smart about it. Our nation's number one -- our government's number one purpose is defend us, national security, maybe be smart about how you cut defense.

ROMANS: We're going to put that under your name for now Will Cain, CNN contributor and chief hawk. Immigration reform will be a hot topic on the campaign trail and it was already at the debate. Listen, guys.


GOVERNOR RICK PERRY (R), PRESIDENTIAL CANDIDATE: Mitt, you lose all of your standing, from my perspective, because you hired illegals in your home. You knew about it for a year. The idea that you stand here before us and talk about that you're strong on immigration is on its face the height of hypocrisy.


ROMANS: Will, I feel like I was hearing this four years ago.

CAIN: You were.

ROMANS: I was. OK, I'm not crazy. If you can turn to immigration, can you turn away from talking about jobs and how to create them and the whole job situation, which you feel is intractable problem?

CAIN: Right, it is and it's number one issue. Immigration will only be an issue in the primary, not in the general election. It seems to be some kind of litmus test about who is the most conservative candidate on the stage. Rick Perry right there, he's resembling what he is, which is a cornered cat. He's kind of desperate.

ROMANS: Didn't Rick Perry allow tuition breaks for --

CAIN: Yes.

ROMANS: So he's criticizing him for hiring somebody yet he's giving tuition for the children of people --

DOMINICK: We all know that was a strategy to go after Mitt Romney, hire some landscapers. Mitt Romney's best response should have been Rick, height is not a word, but he missed that.

But Mitt Romney is very honest the other night when he said I told landscapers I was running for president, you guys can't have this. He was a little bit too honest right there. It shouldn't be I shouldn't have illegals doing my landscaping because I'm running for president, it should be because it's illegal.

ROMANS: All right, let me ask you about - we talked about this in the "Occupy Wall Street." If you believe that the government is broken, if you believe that the economy is not favoring everyone, "Occupy Wall Street" really has been gaining momentum.

I don't think anybody on Wall Street or corporate America thought it would be entering its second month. So where does this movement, Will, you and I talked about it briefly earlier, where does this movement go from here?

CAIN: I'm supposed to pretend like Pete and I haven't been arguing about this for the past couple of days and in the past hour.

ROMANS: They've been arguing in the men's room, arguing in the hallway, arguing in the lines.

DOMINICK: We had a slumber pizza party last Friday and we argued while holding the flashlight.

CAIN: I don't have any idea where this goes, Christine because I cannot define it. Pete and I have a fundamental disagreement. Is it about corruption or is it about more?

If it's about corruption, it has a purposeful place to go, and you can get nonpartisan support or something like that. If it's about more, which I suspect that it is then we'll have some disagreements.

DOMINICK: It's about income inequality. It's the same reason that Tea Party is mad. The same reason that these folks are mad. It's about income inequality in the country and how much it's grown.

Four hundred and fifty thousand people protest in Israel. It's happening all over the world. It's about a lack of upward mobility. That's what it's about.

It was masked by the housing bubble that you could, you know, use the equity in the house for a long time then it was masked by the election of President Obama because people on the left thought that was going to change it.

There's no more masking it. It's here and it's growing and so will this movement.

CAIN: Inequality is a natural phenomenon of a free market merit based system. It's going to happen. The question is how much of your free market principles do you want to sacrifice to flatten out everybody's income strategy?

DOMINICK: What Will just said was insane.

ROMANS: We'll leave it there. You continue to duke it out in the hallway. Will Cain, Pete Dominick, thanks, guys.

All right, could globalization be closing the economic gap between the United States and the rest of the world? Ali's conversation with Thomas Friedman next.


ROMANS: Are America's better days behind us? Not necessarily according to Thomas Friedman, the Pulitzer Prize winning foreign affairs correspondent for "The New York Times".

Friedman is co-author of a new book "That Used to be Us: How America Fell Behind in the World it Invented and How We Can Come Back." Ali Velshi recently sat down with him to talk about it.


ALI VELSHI, CNN ANCHOR: Tom, welcome to the show. You argue that the United States is in decline. Here is the interesting part. For years now, you have been the voice of globalization and why it's necessary.

And why to sort of flatten the world out the rest of the world would have to do better. Some say by definition the United States would have to slow down a little bit. Have you changed your argument?

THOMAS FRIEDMAN, AUTHOR, "THAT USED TO BE US": Well, you know, it really isn't that we have to slow down. Two things happen when the world gets flat, as it were.

One, there was always going to be a relative closing of the gap between the United States and the Indias and Chinas in the world. That's a great thing. We'd all move up, but they move up faster because they are coming from behind farther.


FRIEDMAN: What we want to avoid, Ali, is absolute decline where they move up and we actually move back. There's no reason that has to happen. It can happen. What we have written our book about is how to avoid that in part.

VELSHI: So there's just things that's around us that is globalization, and for many people you are the person who has defined that term because of writing you've done on it. Let's put that aside for a second, this whole concept that we are each other's clients.

We are each other's vendors and the world is flattening out a little whether we like it or not. One of the other reasons why Americans feel that we're in decline is because we have lost some jobs not just to outsourcing, but to this technological revolution where more is automated, it takes fewer people to do the same amount of work. FRIEDMAN: Well, it's a very good point. You know, a friend of ours always likes to say that most jobs, always remember this, are not outsourced to China or Mexico. They are outsourced to the path.

VELSHI: Right.

FRIEDMAN: We used to have a receptionist at the "New York Times" Washington bureau, we don't have receptionists anymore. We don't have someone from Mexico there or China, we have a micro chip. That is true throughout the economy.

VELSHI: All right, so you have these challenges where the rest of the world is open for business. They're also open to do some of the work that we were doing here in the United States for less money.

Even if that wasn't the case we'd be losing some jobs to automation and making people more productive. Then we have this challenge for many Americans, and I believe incorrectly, but many Americans think is the single biggest matter facing us and that is debt and deficits.

Let me say I don't think it's not a serious concern. It may not be the most serious concern. What do you think of the situation of debt and deficit here and elsewhere?

FRIEDMAN: I think we have two big priorities now. One is we want to avoid going into a double dip recession. That's why I've supported President Obama's plan for some near term stimulus that hopefully will also be stimulating, that will go into things that will pay or multiple times in the future.

At the same time, we have a long-term problem. We need to get our fiscal house in order. I think if we do the two together, the short run stimulus and then the longer term once we're back on our feet in a healthy way dealing with a bigger debt and deficit problem we'll be doing both necessary things and in the right order.

The last thing you want to do in the middle of a recession is to get everyone to cut spending. That's how you make a great recession into a depression.

VELSHI: A few years ago, we were talking about gas at $4, oil at $140 a barrel. You know, the recession slowed that down a little bit. Now when you look at the price of oil while it's still historically very high, a lot of people are saying where is the alarm, what's the concern?

You're one of those people, again we share this view, who feels that the rising cost of energy, first of all, we're just pausing on that, we're still on the way up, that is going to be one of the biggest influences of development here and abroad for the decades to come.

FRIEDMAN: Well, you know one of the things I argued in a previous book is the world is getting hot, that's global warming flat. That's more people can see how we live in American sized homes, driving American sized cars, eating American sized Big Macs. And more and more people can aspire to live like we live. So when the world gets flat and crowded, more people living like us, Ali and just more people energy demand is only going to go in one direction and that is up and way up.

VELSHI: Many people around the world are getting more prosperous even as we go through this recession. Many of them as you get more prosperous in other countries urbanized. We're sort of still not doing that effectively in the United States. We still live in a sprawled out fashion. That could fundamentally change as energy prices continue to go up.

FRIEDMAN: Yes, there's no question as energy prices rise, as pollution and climate change become more and more a problem and apparent, we want to move our cities up and not out. It's much more efficient.

You know, one of the most energy efficient places in America as an urban center is New York City. It's Manhattan, because the density of the population is very energy efficient.

VELSHI: It's a global city in that sense. Let me ask you about something else happening in Manhattan. I know you wrote this book sort of unrelated to this particular issue. There is a manifestation right now, "Occupy Wall Street" of some of this sense that that used to be us.

We used to be great. We used to be a place where anybody could become great and wealthy or prosperous in the United States. That's definitely a feel that's not the case now. I ask you this because this disparity between rich and poor has been going on for time immemorial in America.

Where have we come to where we now believe there really is an us and a them and us can't become them?

FRIEDMAN: Well, I think that is one of the impacts of globalization, there's no question. For the United States, we lost a lot of advantages we had at the end of World War II. We lived in a very protected really economy.

As the world flattened out, our workers have become more exposed to competition not only from cheap labor, but from cheap genius around the world. That's one thing that's definitely had an impact.

If you combine that with rising health care costs that eat up more and more of the average salary of every American and you have a prescription basically for no real growth in wages for many people for a long time.

VELSHI: This is a very real problem now even for working Americans that work for large corporations, about to go into their open enrolment period. And they're all going to get a big surprise when they realized that they are going to pay more for the same health care or more for even less health care. Final question, Tom, a subject you know a great deal about, China. Is it an opportunity or does it continue to be a threat? How do we as a nation comfort this rapid growth that is in some sense responsible for us not being where we were?

FRIEDMAN: Well, I think the most effective company strategy vis-a-vis China is two things. One, understand China will be the world's biggest market in the next 30 years. Therefore, you've got to be there. You got to be close to that market and close to those customers.

It's not a bad thing. I think the second strategy is really the Apple strategy. Use China for part of the global supply chain that's most efficient for you. Imagine the iPod in America, orchestrate the global supply chain that produces the iPod in America.

But you can't to expect to have every job in the supply chain be in America if the cheaper jobs assembling the iPod are in China, that's not a problem. Let's remember that over $0.80 of every dollar of the iPod comes back to America, Apple headquarters and Apple shareholders.

So let's make sure we're at the right end of that supply chain, inventing the idea, orchestrating and doing the most high-end jobs here and let them do those that are less high-end.

VELSHI: Well, the beginning of the book, the title "That Used to be Us" seems to be a little sad, a little reminiscent, but the rest of it, "How America Fell Behind In The World We Invented And How We Can Come Back" makes this a very, very compelling read.

Tom Friedman, always a pleasure to talk to you. Thank you for being with us.

FRIEDMAN: Always a pleasure.


ROMANS: If you're just keeping your money in a savings plan, you could be missing out on an opportunity, how to make money with money next.


ROMANS: Never before have savers been awarded so little for stashing their money in a bank account or a CD. Is there any place left to park your money and make a little money to make a little interest, from least risky to most risky. Here's what it looks like.

All right, there's always your mattress, right? It's the least risky, but it's really a bad idea. It's not guaranteed by the federal government, it's not going to grow. In fact with inflation your money gets less valuable every year you leave it there.

All right, what about the bank? Well, the pro is, it is insured by the government if the bank goes belly up, up to $250,000 per account. But the con is found the average interest on a standard savings account is only about half a percent.

Unless you have a rock online bank, you've got a lot of money stashed in a jumbo checking account or you've combined your checking and savings and investment accounts, you aren't getting squat. Just one or two fees, by the way, means you're losing money in the bank account.

OK, your next choice is slightly more risky, but more potential though for reward. It's stocks with dividends. The company pays you interest on each share that you own. One example, Altria, the parent company of cigarette maker Philip Morris, it's going to pay you 6 percent to hold its shares.

Other companies like Merck, Pfizer, there are hundreds of them that will pay you dividends of almost 5 percent, but to keep your risk low, stick with large cap, blue chip stocks so the history of raising dividends over several years.

Now here's where it starts to get more risky. You've got something called ETFs with more risks, high yield exchange traded funds is another opening. With these you can pick a basket of stocks. These are some of the most popular high yielding ETFs from Wisdom Tree, Vanguard and Standard & Poor's.

And finally, high yield mutual fund. A mutual fund, you know, is when you contribute to a mutual fund with thousands of other investors. It's a fund manager buys stocks, bonds and other securities with your money all together.

They are ranked by fees and performance so you can see how well they are doing. PIMCO and Fidelity have a couple of top ranked funds. For many more ways to make money with your money, you can check out

Also coming up, will "Occupy Wall Street" change the way companies do business in America? Stick around. My XYZ is next.


ROMANS: You have to give it to the "Occupy Wall Street" movement. Virtually no one in Washington or America's sweet suites thought it would last to do it at second month. But as time goes on and the movement endures, oddly some of the very elite targets are dismissing its motives as unsophisticated as one told the "New York Times" or unfocused or just about them. How can they dismiss it?

They see the pictures of the free Tibet movement, anti-war protesters or the Iran hikers who attended a rally in Oakland this week. They say see this isn't about corporate America, it's not about us. It's a populace movement, more peace and free love of the 1960s than middle class uprising.

Well, two bits of analysis caught my eye that suggests that attitude may be a mistake. Henry Blodgett, former star stock picker banned from the industry and now offered cutting insight into that world. He pointed out that the 1960s may have been about peace and love, but in the end, it was public outrage that helped end the war.

To dismiss this movement as unfocused wrongly under estimates it. And Dallas Mavericks owner, Mark Cuban revealed what he says is the great CEO white lie. We are acting in the best interest of our shareholders.

Cuban says that the 1 percent, the top 1 percent think it absolves them of any of the angst reflected in the "Occupy Wall Street" movement. Cuban says the protesters should buy stock in companies, occupy their shareholder meetings and demand that their friends and families who own stocks directly or indirectly through mutual funds that they do the same.

His blog posting about that this week was shared widely among business types. Occupiers have said they don't want to work within, the current system to change it. They want to create a whole new system. But their best chance of real change may actually come from occupying board rooms instead of say Lincoln Center, home of the opera.

And that's my XYZ. Thanks for joining the conversation this week on YOUR MONEY. Ali Velshi is here every Saturday 1 p.m. Eastern, Sunday at 3 p.m.

Make sure to check out our new book with Ali Velshi, "How To Speak Money." It's a step to step guide by understanding the language of money with everything you need to know now. Head to right now to be one of the first to get a copy.

You can stay connected to us 24/7 on Twitter. The show handle is @cnnyourmoney. Have a great weekend everyone.